Why you should stay the course in the market, (but not) in your job

Unless you have been living under a rock recently, chances are you’ve been inundated with information from the news, social media (and perhaps a paranoid family member or two) about the COVID-19 outbreak. While there are a few key take-aways that we can already discern from this outbreak – such as the fact that its probably not a good time to take a cruise – the whole picture of what this epidemic will become is still developing.

So what should we do? The stock market is just as confused as we are. On February 27th, the Dow had the greatest ever single-day point decline in history. It’s entire history. Then, a few days later on March 2nd, it had the largest point surge in its history. Just when you felt we might be back on track, the Federal Reserve provided an emergency interest rate cut and down went the Dow again. And it’s been bouncing around undecidedly ever since. It’s painful to watch.

Chances are you’ve already received a few emails from your investment accounts reminding you to ‘stay the course’. And, history would show you those emails are right. If your investments are for long-term planning (and they should be), staying calm and leaving your money in the market is going to be your best bet. Don’t believe me? Here’s what Fidelity found would happen to an account if you only missed just a few of the best days in the market over the long run.

Don’t try to time the market

I understand how tempting it can be to try to time the market – but let me be an additional reminder for you that timing the market doesn’t work. Leave that money put. Depending on your retirement timeline, the smarter thing would likely be to invest more. As they say, buy low and sell high. Remember, we’re investing for the long run. We’re investing to pay our future selves. We’re investing to make money.

I’m guessing the reason you have your job right now is also to make money. We work to pay our current selves and fund investments. A job and an investment are, simply put, vehicles to set you up for financial stability and success. While you may garner other benefits from your job, let’s be honest – we work to get paid. Unless, perhaps, you’re one of those lucky folks who hit the lottery and are just working to keep busy. If that’s you – thank you for keeping the dream alive for the rest of us!

A major difference though, is that while the stock market has certainly had its fair share of volatility, it has always rebounded and continued an upward trend in the long run. If that fact isn’t impressive enough, it’s also the opinion of Warren Buffett, so don’t just take my word for it. Take a moment to think – would you confidently say that about your job too? Despite management changes, mergers, dissolution of positions, and HR restructures…you name it… will your job always rebound and keep you on a positive upward path? Chances are it won’t. That’s why you should stay the course in the market, but not in your job.

Don’t confuse job hopping with lack of loyalty

I’ll be the first to say that I am a big fan of loyalty. A lot of people reading this next part might assume that if you even mention “jumping ship”, how could you value loyalty? The fact is that I don’t see career movement and loyalty as mutually exclusive concepts. Employment is a partnership and should be viewed as such. It presents an equal give and take. Let me also reiterate that I know a job isn’t just about money. But we do work to make money. And if your current job is not supporting your long term financial goals, it’s not likely to follow the stock market’s lead.

It’s time to flip the mentality that job hopping is a bad thing. Certainly, if you change jobs too frequently, that can be a detriment to you and the companies you work for. But, the opposite is also true. Stagnation, comfort with the status quo, and the lack of opportunity to learn new things can lead to poor performance. In fact, the Muse points to evidence that switching jobs within the “sweet spot” of every 2-5 years can not only ensure you’re better paid but also make you a better employee.

How does job hopping provide you with better pay? Let’s break it down. Cameron Keng’s article in Forbes shows that the average annual raise for employees falls between 1.3% and 4%. If you’re lucky, that will simply keep your salary on track once you account for inflation. If you’re not so lucky, that means you’ll actually be making less and less each year that inflation outpaces your raise. On the flip side, the average salary increase for people who change jobs is between 10% and 20%.  If you extrapolate that out, that means someone who stays the course at their job could be earning 50% less over their lifetime. If reading that statistic didn’t give you pause, you should go ahead and read this whole paragraph again.

Why is that the case?

There are lots of reasons that contribute to those discrepancies. A major one is that leaving your salary up to chance with negotiating raises and small cost of living increases comes from a place of weakness. When you have the chance to discuss a new job, that’s when you have the ability to negotiate from a place of strength. Employers tend to have the greatest amount of motivation and flexibility in determining salary at the time a new employee is hired. So, waiting and vying for a promotion that might become available is not your best bet. Instead, focus your effort on diversifying your skills and experiences the same way you would your portfolio. The payoff will come with your investments if you stay the course in the market. The payoff will come with your job if you take charge and set the course. That is why you should stay the course in the market, (but not) in your job.

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